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NBIM CEO Yngve Slyngstad

Norway’s giant sovereign wealth fund lost
$32 billion in the third quarter of 2015 due to a slump in the
value of its stock holdings. Azerbaijan and Russia dip into
their savings funds. QIA backs a new commodities buyout
firm.

Norway’s Heavy Losses

Stock-market volatility wreaked havoc on Norway’s
sovereign wealth fund, the Government Pension Fund Global, in
mid-2015. According to the latest performance report from
Norges Bank Investment Management (NBIM), the arm of the
central bank that manages the fund, the value of
GPFG’s investments fell by 4.9 percent over the
three months through September 30 —
that’s a decline of approximately 243 billion
kroner ($32 billion).

In a statement, NBIM CEO Yngve Slyngstad ascribed the losses to
"the decline in global equities markets, especially the Chinese
market." NBIM has increased its exposure to Chinese shares over
the past two years and now invests approximately 2.8 percent of
the fund’s equities portfolio in the Asian power.
GPFG’s Chinese stocks lost 21.3 percent of their
value over the quarter.

The fund’s China woes were compounded by plunging
share prices in two European firms in which it owns
multibillion-dollar stakes: Swiss conglomerate Glencore, which
is struggling amid falling commodities prices, and German car
maker Volkswagen, which is at the center of a scandal
focused on emissions-testing falsification in the U.S. GPFG's
overall assets stood at 7 trillion kroner ($822.9 billion) as
of September 30.

Oil Slump Hurts Azerbaijan, Russia

For now, Norway has resisted the urge to dip into GPFG for
capital to support budgetary spending, despite a slump in
government oil revenue (although the situation may change in
2016). Elsewhere, though, savings funds are propping up
cash-strapped governments.

Take the State Oil Fund of the Republic of
Azerbaijan (SOFAZ). The fund’s assets
under management dropped from $37.1 billion to $34.7
billion over the first nine months of 2015. SOFAZ
received $5.2 billion in revenue from oil and gas sales
over that period — and transferred $5.4 billion
to the state coffers. The fund also paid out
approximately $700 million to finance ongoing
infrastructure projects and other government spending
initiatives.

Azerbaijan’s neighbor Russia is on the brink
of exhausting its National Reserve Fund, a
stabilization vehicle. Minister of Finance Anton Siluanov
has confirmed the government will withdraw 2.5 trillion
rubles ($37.9 billion) from the fund —
approximately half its total assets — before the
end of the year. He’s warned that further
withdrawals in 2016 could deplete the fund entirely.
Russia's economy has been hit hard by Western sanctions
and the slump in global oil prices over the past 12
months.

QIA Backs $1.7 Billion Commodity Buyout Firm

While the collapse in oil prices is causing headaches for
many government institutions, it’s also
creating investment opportunities.

This week the Qatar Investment Authority (QIA)
agreed to invest in London-based Global Natural Resource
Investments (GNRI), a new $1.7 billion
commodities-focused private equity firm. GNRI is led by
Mark Brown, a former executive at U.K. financial services
firm Barclays, who led a management buyout of Barclays'
natural resources unit to create the new, independent
company. Barclays will retain a stake in GNRI, which is
hoping to capitalize on a wave of private equity deals
sweeping the oil and gas sector as global energy giants
seek to offload assets to bolster their balance sheets.

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